Trade dispute hangs over White House child-migrant fight

Even as the White House scrambles to deal with the flood of child migrants from Central America, a $277 million economic aid package for El Salvador is being delayed by the administration because of a trade dispute over a modest seed program to help small farmers grow staples like maize and beans.

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The juxtaposition of events is extraordinary at a time when the migrant crisis has refocused attention on the level of poverty and violence in the region.

Indeed, Vice President Joe Biden just returned from Guatemala, where he pledged support to help Central American countries improve the lives of their children. On top of this, first lady Michelle Obama has devoted so much energy to promoting the cause of improving nutrition for children.

That’s a goal, too, of the Salvadoran seed program, known as the Family Agriculture Plan. Begun in 2011, it is credited with helping thousands of low-income farmers improve production and move toward a more sustainable food supply.

The trade dispute stems from how the ministry of agriculture procures the seeds for distribution. Government contracts for seed purchases are estimated at about $30 million a year, and the question is whether units of U.S. corporations like Monsanto Co. are being cut out in the effort to buy more seed from smaller, Salvadoran producers.

Supporters of the program argue that the ministry is seeking only to allow small and medium producers to better compete, while fostering a sustainable seed industry inside El Salvador. Critics say the process in recent years has violated the principles of transparency and nondiscrimination under the Dominican Republic-Central America Free Trade Agreement, or CAFTA-DR, approved in 2005.

“The United States is engaged with the government of El Salvador regarding multiple bilateral trade issues — as we are with all countries — including government procurement requirements,” said a spokesman for the USTR. “In those discussions, the U.S. is emphasizing the transparency obligations of the government procurement chapter of CAFTA-DR trade agreement. … The U.S. believes that open markets for agricultural commodities, agricultural inputs and food products help to efficiently move these goods from those who develop them to those who need them, benefiting producers and consumers.”

Given Monsanto’s presence, activists have sought to make the fight about the giant company’s genetically modified, or GMO, seeds. And the political optics feed into the charge from critics that the administration is manipulating the approval of the compact in order to advance the interests of U.S.-based, transnational agribusinesses.

The U.S. Embassy in Salvador denies any effort to promote GMO seeds. But in a recent posting on its website, the embassy acknowledges that a resolution of the seed procurement issue is a condition for the U.S. aid.

“We are asking the government of El Salvador to implement the procurement program for corn and bean seeds in a competitive, objective and transparent manner,” the embassy wrote. “We are hoping the remaining issues can be resolved.”

At stake is a $277 million aid compact for El Salvador that won initial approval from the Millennium Challenge Corp. last September but has yet to be finally cleared because of the trade fight.

Because the MCC is an independent foreign aid agency, administration officials sought Sunday night – after publication of this story — to distance the White House from the impasse. But in fact, the majority of the nine-member MCC board owe their allegiance to President Barack Obama, and Secretary of State John Kerry serves as the chairman and Treasury Secretary Jack Lew as vice chairman.

Trade officials did not dispute that the Salvador seed procurement dispute was a reason for the delay. But they said a second important issue is money laundering. And MCC also wants El Salvador to do more to address those reform commitments made by its government when the compact was initially approved last fall.

In any case, liberal Democrats in Congress are circulating a draft letter citing the trade issue and asking Kerry to intercede and free the MCC funds.

“MCC is now conditioning the signing of the compact on ending an important component of El Salvador’s national food security program,” Reps. Mark Pocan (D-Wis.) and Mike Honda (D-Cal.) wrote in a “Dear Colleague” letter asking for support. “Agriculture and food security are not part of the activities included in the new compact and were not part of the compact negotiation. … Insisting upon conditions that would undermine a government food security program should have no place in the MCC or U.S. development assistance.”

The whole situation risks embarrassing the White House at a time it is seeking an emergency supplemental appropriations request to address the migrant crisis.

That request — due the week of July 7 — is expected to total well over $2 billion and include new money for the State Department and foreign aid programs as well the departments of Homeland Security and Health and Human Services, which are most responsible for the children when they cross the border.

By declaring the spending an “emergency,” the administration hopes to have more leeway under the budget agreement reached last December. And the request should give more clarity to increased funding already approved by the House and Senate Appropriations committees.